September 11, 2007

Smithfield doubles anticipated losses due to Romanian swine fever

Smithfield Foods Inc. Friday (Sep 7) announced that the swine fever outbreaks in Romania would cost more than double of what it previously anticipated.

Swine fever outbreaks at two of its hog farms in the country would shave US$12-13 million off 2008 earnings, the company said.

The earlier estimate was based on outbreaks at two Smithfield facilities but the disease was discovered later on at a third farm.

Given the third reported outbreak and rising disposal costs, the write-down costs are expected to exceed the previously reported level, the company said in a filing with the Securities and Exchange Commission.

More uncertainty lies ahead given the fluidity of the situation in Romania, the company said.

Smithfield said it might be eligible for partial reimbursement from the government, but would not receive those funds by the second quarter.

The company also expects limited interruptions to farm production in Romania over the next 6 to 12 months.

The company was criticized by Romania's green groups for overcrowding its hog farms. Smithfield has been blamed for hindering the country's efforts to enter the EU markets with its latest outbreaks, although outbreaks have occurred at farms owned by other companies previously.